The Mysterious Companies Behind Costco’s Kirkland Signature and Trader Joe’s O’s The Mysterious Companies Behind Store Brands Like Kirkland Signature The True Story Behind Store Brands

They have become forces in their own right, accounting for approximately 21% of sales in the $1.7 trillion U.S. grocery industry, according to IRI.

But the origins of in-store brands remain largely secret.

Retailers usually don’t talk about the companies that make their brands. Likewise, manufacturers have little reason to disclose that they make products similar to their brand name under another brand that sells cheaply.

Many leading national brand manufacturers create private labels for many retailers. Late 1990s It is estimated that more than half of the manufacturers of the brand also make specialty items.

While department store brands ostensibly compete with manufacturers’ national brands, manufacturers often have excess capacity on their product lines. To earn extra, some will use the extra capacity to make private labels.

Manufacturers of other brands will start producing private labels as an incentive to retailers in the hope that they will be rewarded with more shelf space and a place for their patriotic brands.

“Most manufacturers are not open about it,” said Jean Benedict EM Steenkamp, ​​a marketing professor at the University of North Carolina who deals with private labels and branding. “Manufacturers don’t want to be known to undermine the strength of their brands.”

But there are some exceptions. Kimberly Clark (CMB)Huggies diaper maker, makes Kirkland Signature diapers for Costco and Duracell makes Kirkland Signature batteries, costco (cost) said managers.
Georgia-Pacific, the maker of Brawny and Dixie, also produces store brands. such Henkel (Henky)Purex and Dial, manufacturer.

Eight O’Clock Coffee and Kenmore

Store stickers have been around since the early days of retail and the rise of consumer labels in the 1800s.

Macy’s whiskey jugs are sold under their own name. According to Christopher Durham, president of the Velocity Institute, a trade association for private label brands, customers can return the jugs for refills.

Montgomery Ward developed its own line of aspirin in wooden containers, while Great Atlantic & Pacific Tea Co. (aka A&P) branded spices with the tagline “Take grandma’s advice, use A&P spices”. A&P later developed Eight O’Clock Coffee, one of the most popular private label brands of the time.

Eight coffees were sold 24 hours a day in 1949 at the Great Atlantic And Pacific Tea Company (A&P).
However, no American dealer has been more successful in developing their own brands Van Sears, Roebuck.

In 1925, Sears created the Allstate tire brand. A few years later, according to Durham, Sears released their first literal key. The Kenmore line, which started in 1913 as a sewing machine brand before branching out into vacuum cleaners and other home appliances, has become the leading home appliance brand in the United States.

However, these special characters were the exception.

For most of the 20th century, national brands such as Jell-O, HJ Heinz and Campbell’s soup (CPB) And Johnson & Johnson (JNJ) He had power over the shops. These manufacturers flooded the airwaves and newspapers with advertisements extolling the benefits of their products.

Most customers were fiercely loyal to certain brands, not retailers. A store without big brands would likely be crushed, giving manufacturers massive leverage.

In addition, many store brands have also been viewed as fading and cheap imitations of national brands.

Durham said the low point for private labeling came in the 1970s, when stores tried to cut costs and roll out generic drugs with a simple white background and black letters identifying the product: beer, soap, Coke, beans and other staples.

Loyal shoppers

Retailers create private labels for a variety of reasons, including to increase profitability and sometimes as a bargaining tool against brands.

Private labels often have 20% to 40% more profit margins than national brands because stores don’t have to pay for advertising, distribution or other brand costs that are included in the prices of big brands.

Great Value is Walmart's largest retail brand.

In the mid-20th century, many retailers began to develop their own brands to regain the bargaining power of dominant suppliers and control their prices. With the consolidation of American retailing in recent decades, the power dynamic between retailers and suppliers has reversed. Now stores have more opportunity to offer their own brands, whether the brands like it or not.

“Forty years ago, Walmart’s grudge against Procter & Gamble was a precarious situation. Now Walmart is much bigger than P&G,” said Steenkamp, ​​the marketing professor.

Today, stores’ private label activities are more complex than ever, and there is much more focus on chains.

Krishnakumar Devi, Head of Customer Engagement at IRI, said stores today are more likely to develop a special brand or distinctive product to differentiate themselves from competitors and create loyalty for shoppers.

costco (cost)for example, you decide to make a Kirkland signature because the leading brand won’t sell it to the dealer. Or Costco thinks the namesake brand prices have gone up too much and can make their product just as good and sell it for 20% less.
Costco has never lost supplier relationships Kirkland launches its own products Richard Galanti, the company’s chief financial officer, said in an interview earlier this year that these brands are usually not happy when Costco offers a.
Costco gets nearly a third of its revenue from the Kirkland Signature brand.
Retailers have been sued for making products that closely resemble national brands. Titleist Golf Ball Brand Owner Lies Against Costco For Patent Infringement While Williams Sonoma (WSM) lawsuit Amazon (AMZN) Selling “fakes” under own brand. Both cases have been settled.

The US House Judiciary Committee and other lawmakers and regulators around the world have been investigating whether Amazon uses seller data to create its own brands and illegally favors its own brands on its website.

Amazon has said it does not use data from individual third-party sellers to report on the performance of its own brands and does not favor its own products on the site.

Most stores start small with their own brands. For example, grocers often first offer a shelf-stable product such as pasta, flour, sugar or rice that is easy to make and where brand loyalty within this category is not strong.

“Don’t start with the hardest things,” Steenkamp said. “As stores build more experience and success, they move into new categories.”

How do you know who makes brand name stores?

So how do you find out who is behind your favorite store brands?

Product recalls are often the most revealing way to discover which brand manufacturers are behind specific private labels.

For example, Dole last year recalled fresh salads and vegetables, including Walmart’s own Kroger and HEB brands.

GM smokes (SJM) It recalled some of its Jif peanut butter products this year, as well as branded items it made for Giant Eagle, Wawa and Safeway. Big companies like it conagra (CAG) McCain Foods sourced products from Trader Joe’s.
Then there are private label manufacturers such as: Eat treehouse (THS), which makes snacks under labels from supermarkets, big box chains and other retailers. For example, nearly a quarter of the company’s $4.3 billion in revenue came from last year walmart (WMT).
Target has dozens of its own brands, such as Cat & Jack, universal wire and up & amp.  over.
James Walser, who led the launch Goal (TGT) The up & up home essentials and personal care brand said in 2009 that Target was trying to move away from national brand manufacturers as it evolved into smarter suppliers that focused only on making private labels.

Some larger retailers also make their own labels. Kroger, for example, makes about 30% of its own products.

Perhaps the strangest producers of store brands are the retailers that make private labels for their competitors: Lucerne Foods, owned by Safeway, makes private labels for Safeway’s competitors.

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